Examination of Witnesses (Questions 120-139)
NATIONAL HEALTH
SERVICE AND
DEPARTMENT OF
HEALTH
16 OCTOBER 2006
Q120 Mr Bacon: The Audit Commission
provided another suggestion of having a national buffer to allow
NHS trusts to operate more sustainably. Will you implement that
buffer?[9]
Mr Nicholson: It will mean that
we will have to take money from somewhere else in the system to
create it.
Mr Bacon: With respect, I did not ask
what implementing the buffer would mean; I asked you whether you
would implement it. If the answer is yes, please say yes; if it
is no, please say no.
Mr Nicholson: We have not come
to a final conclusion.
Mr Bacon: About whether you will or not?
Mr Nicholson: That is right.
Q121 Mr Bacon: When do you think
you will come to a conclusion?
Mr Nicholson: In the next few
weeks.
Mr Bacon: Okay.
Mr Nicholson: We certainly need
to do it, because soon we need to put out the new tariff for next
year and the operating statements about the way in which the NHS
will be financially managed next year.
Mr Bacon: You will come to a conclusion
in time for us to issue our report?
Mr Nicholson: Yes.
Mr Bacon: So, could you write to us about
it?
Mr Nicholson: Yes.
Q122 Mr Bacon: Thank you. That is
very kind. The Audit Commission also suggests: "The NHS Manuals
for Accounts should be reviewed, made less prescriptive and more
principle based and brought more closely in line with UK Generally
Accepted Accounting Principles (GAAP)." Is that a recommendation
you accept?
Mr Douglas: Yes.
Q123 Mr Bacon: The Report goes on:
"This would also have the benefit of making NHS finance staff
less reliant on specific Department of Health instructions and
more reliant on their own professionalism." Would you accept
that, too?
Mr Douglas: Yes.
Q124 Mr Bacon: Excellent. Paragraph
3.45 on page 43 talks about the organisations that were required
to send in a recovery plan that would be reviewed by the SHAs
and by the turnaround directors, and eventually released—the
word used in the report—to the national programme office.
As at 23 May, the national programme office had formally received
11 plans from organisations within the turnaround cohort. How
many plans have now been received?
Mr Nicholson: Sixty.[10]
Mr Bacon: Sixty? So, 60 out of the 98?
Mr Nicholson: Yes.
Q125 Mr Bacon: And how many have
been assessed and accepted?
Mr Nicholson: The 60 have been
accepted.
Q126 Mr Bacon: Oh. So, how many have
been rejected?
Mr Nicholson: Well, I do not know
whether we actually reject plans, but we send them back. The balance
will have been sent back for more work to be done on them.
Q127 Mr Bacon: Right. May I ask you
about my own area, Norfolk? The new PCT in Norfolk—the combined
PCT—starts with a very large deficit. I have got a document
here from it. It says that it starts with a debt of £50 million
from the former five PCTs. Work has been undertaken to identify
the robustness of the projected position. The current year-end
forecast is a projected deficit of £40 million. This sounds
a lot compared with the national total. Norfolk only has 800,000
people. Are there special problems associated with the east of
England and with Norfolk?
Mr Nicholson: The east of England
seems to have a lot of debt in it. That is absolutely true.
Q128 Mr Bacon: Why is it so much
more? It is pretty much more than everywhere including London,
according to the SHA summaries that I have seen.
Mr Nicholson: Yes.
Mr Bacon: Why is that? It is significantly
more. Most of them seem to be in the 30s, 40s or 50s of millions,
and the east of England combined is at well over £200 million.
Why is that?
Mr Nicholson: There are a variety
of reasons, depending on where in the east of England you want
to talk about. Some of it is historic debt, and problems that
have not been dealt with in the past, which have rolled on. Some
of it is related to the kinds of things we talked about earlier
in relation to contracts. There is a whole range. I do not think
there is one particular issue that will identify the east of England
as being special.
Q129 Mr Bacon: You talked about the
extra money going on salaries. Is it possible you could send us
a note showing the increased spending—because everyone knows
there has been a lot of extra money going into the NHS—since
Agenda for Change, the GP contract and the consultant contract
were implemented? Can you write to us with a table showing the
amount of increased spending, the total of spending and in each
year the total on salaries, so that we can see how much has gone
on salaries out of the increase, and how much was left for other
things?[11]
Mr Nicholson: Yes.
Mr Bacon: I will leave it to your artists
to come up with a bar chart that shows it clearly, but to have
it with numbers as well would be helpful.
Mr Nicholson: Yes.
Q130 Mr Bacon: How many hospitals
have closed one or more wards?
Mr Nicholson: I have not got that
information.
Mr Bacon: It must be accessible information.
Mr Nicholson: We have a yearly
census on the number of beds, but it is not something we would
collect routinely, regularly.
Mr Bacon: You could find out.
Mr Nicholson: I do not know whether
there is a mechanism.
Mr Bacon: A quick e-mail, Mr Nicholson,
would do it.
Mr Nicholson: I do not know how
practical it is.
Q131 Mr Bacon: How many hospitals
have actually reduced the number of nurses that they employ, recently?
You do not collect figures on that either?
Mr Nicholson: We collect total
figures.
Mr Bacon: It must be possible to work
it out, surely, or just ask them. Each hospital must know how
many nurses it employs, must it not? We often hear members of
the Government standing up and saying how many nurses are employed.
That can only be possible because information is taken and then
aggregated.
Mr Nicholson: Yes, we have got
total figures.
Q132 Mr Bacon: Well, if you could
send us figures on how many hospitals have reduced the number
of nurses they employ I would be interested to see that.[12]
Could you say what are the total costs to trusts of delays in
the national programme for IT in the health service, whether or
not they are recoverable from "Connecting for Health"?
A lot of trusts have complained both about the costs incurred
from the sudden decision to cut "Information for Health"
and about delays in the national programme causing them to incur
costs on things like training, and various other things, that
they cannot recover from CFH or anyone else. What is your figure
for how much?
Mr Nicholson: I hear all this;
I have seen no evidence to support that assertion.
Q133 Mr Bacon: You do not think that
the trusts have incurred any costs that they cannot recover?
Mr Nicholson: I have not seen
any evidence that will support what you have just said. I have
heard lots of talk about it—lots of chat—but I have
not seen any numbers that would lead me to believe that was occurring.
Mr Bacon: If you find any, would you
send the Committee a note about it?
Mr Nicholson: I will if I find
any.
Q134 Mr Bacon: How much was spent
on planning new hospitals and extensions that were not built?
We know about the £15 million for the Paddington health campus,
but how much in total?
Mr Nicholson: I am sorry; I have
not got that.
Mr Bacon: Is it possible you could send
us a note on that as well?[13]
Mr Nicholson: I am sure we could
do that.
Q135 Chairman: We have had problems
with these notes in the last year. There can be no vagueness on
the part of accounting officers in their answers on provision
or otherwise of notes to this Committee, so you must read the
transcript. You were asked some specific questions and you must
tell us whether you can provide these notes or not.
Mr Nicholson: Yes.
Chairman: And you must bear personal
responsibility for delivering these notes on time to this Committee
and for their accuracy.
Mr Nicholson: I understand.
Q136 Mr Touhig: The NAO and Audit
Commission Report, right at the beginning on page 1, tells us
that next year spending will reach almost £93 billion and
that "healthcare . . . remains the fastest growing area of
public expenditure." Is our money safe in your hands?
Mr Nicholson: Absolutely. Even
though we have a deficit, which clearly we in the NHS are not
proud of, it is a relatively small deficit and there is little
evidence to support an idea that we are not spending the money
on what it is meant to be spent on, which is improving services,
more staff, buildings, treatments, drugs and all the rest of it.
But there is lots of good evidence to show that it is being used
to good effect so, yes, I think it is safe.
Q137 Mr Touhig: I accept your point.
The Chairman made the point at the beginning about improvements
in the health service as a result of the investment. However,
Mr Clark made a point about the number of PCTs that have problems;
one third have financial problems. Is it not a fact that you negotiated
nationally the pay increases for the consultants and GPs and you
got it wrong?
Mr Nicholson: We got it wrong.
Mr Touhig: You got it wrong by about
£300 million.
Mr Nicholson: But we also got
other things right, which improved that.
Q138 Mr Touhig: I accept that. But
the consultants and others believed you had your own mint. They
thought you were going to print the money and just give it to
them and, frankly, you did, did you not? You just caved in.
Mr Nicholson: No, I do not think
we did. If you take the GMS contract, there have been some significant
improvements in primary care services which are demonstrable though
the quality of outcomes.
Q139 Mr Touhig: So consultants are
working harder and doing more as a result of the extra money you
have given them.
Mr Nicholson: Overall, productivity
has increased.
9 Note by witness: Earlier this year, the Secretary
of State asked Sir Michael Lyons and the Audit Commission to undertake
a review of the NHS financial regime. The final report was published
in the summer. The Secretary of State is now considering options
in respect of each of the report's recommendations. The Department
will respond formally, in due course, and will then notify the
Committee. Back
10
Note by witness: 60 is the number of category 1 &
2 received (those in most urgent need) out of 63. 31 out of 35
category 3 & 4 had also been received, making a total of 91
out of 98 received. Back
11
Ev 24 Back
12
Ev 24-33 Back
13
Ev 33 Back
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